Tension before the summer break

In the course of this week, the two major central banks, the ECB and the US Fed, will make their last interest rate decisions before the summer break. Even though the US Federal Reserve paused its interest rate hikes in June, it would be a big surprise if both institutions did not raise the key interest rate and related rates by a quarter of a percentage point each. The ECB would then have the key rate at 4.25% and the US Fed in the range of 5.25%-5.50%.

The ECB and the Fed would then go into summer recess in lockstep (there are traditionally no central bank meetings in August), but that could be the end of the parallelism. It can be assumed that the interest rate strategies will differ from autumn onwards. The US Federal Reserve will probably reach the interest rate peak on Wednesdays and wait in the autumn to go in the other direction and lower interest rates in the first half of 2024. A move that has been predicted several times but has been pushed back further and further. However, the current macro data now suggest that inflation is coming back in the US and that the economy will remain reasonably stable, so that the Fed has probably achieved its goal.

The picture in Europe, on the other hand, is somewhat different. Although we are already seeing falling headline inflation, the downward trend in core inflation (excluding energy and food) does not yet seem to be taking hold and - also due to individual base effects - even a new record value this summer would not be a big surprise. Thus, the forecast for the decision at the ECB's first autumn meeting in September is a vabanque game for the time being. The president of the ECB, Madame Lagarde, has been pointing out for several meetings that the decisions are very data-driven and are thus made at short notice. For some days now, however, the statements of the individual central bank members have also been very cautious when it comes to the meeting in autumn. Whereas in June the hawks, those members who favour higher rather than low interest rates, traditionally from the northern countries, were still calling for further interest rate steps in the autumn, at present the statements are more in the direction of the official ECB line of not making any preliminary decisions.

Of course, this uncertainty also has an impact on the capital markets, even more so since the summer is often a rather quiet and less liquidity-driven period. For example, the ten-year yield on German government bonds rose by about 0.25% about three weeks ago due to good labour market figures in the US. This was loosely along the lines of "the labour market is stable, interest rates can be raised further." In the previous week, on the other hand, the US inflation figures came in and they were better than expected - immediately the move was reversed and the yield returned to its initial level. This time under the thought, "Inflation is on track, no need to raise rates further." We are bracing ourselves for such data-driven swings in sentiment over the next few weeks, but will not be panting after every new number; instead, we will remain true to our long-term, strategic focus and build a balanced portfolio on that basis at all times.

This information is intended to provide a general overview of current market data and does not contain any direct or indirect recommendation for a specific investment strategy in the sense of a financial analysis.
When investing in securities, price fluctuations due to market changes are possible at any time. Analysts' opinions, market opinions Performance data with reference to the past do not allow reliable conclusions to be drawn about future results